Bipartisan launch for a new Glass-Steagall Law governing banks
FDR flanked by Carter Glass on his right, Henry Steagell on his left
Senator Elizabeth Warren said a bipartisan group of U.S. lawmakers are introducing legislation aimed at separating commercial and investment banking, recreating a Depression-era firewall established by the Glass-Steagall Act but repealed in 1999.
“Despite the progress we’ve made since 2008, the biggest banks continue to threaten the economy,” Warren, a Massachusetts Democrat, said today in an e-mailed statement. The measure would “make our financial system more stable and secure, and protect American families.”
The legislation is also sponsored by Senators John McCain, an Arizona Republican, Maria Cantwell, a Washington Democrat, and Angus King, an independent from Maine who caucuses with the Democrats.
The bill aims to separate traditional banks that offer checking and savings accounts insured by the Federal Deposit Insurance Corp. from “riskier financial institutions” that work in investment banking, insurance, swaps dealing, hedge funds and private equity, according to the statement.
Warren told regulators testifying at a Senate Banking Committee hearing today she did not expect them to back her right away…“Based on what the regulators did to Glass-Steagall over the last 30 years, I don’t expect anyone on this panel will jump and endorse the new Glass-Steagall bill,” Warren told officials from the U.S. Treasury Department, Federal Reserve and other agencies. “Even so we’re going to keep pushing for it…”
McCain, a former Republican presidential candidate, said…“Since core provisions of the Glass-Steagall Act were repealed in 1999, shattering the wall dividing commercial banks and investment banks, a culture of dangerous greed and excessive risk-taking has taken root in the banking world,” McCain said in the statement.
The idea of restoring the Glass-Steagall has also gained some support from Wall Street veterans. Sanford “Sandy” Weill, whose creation of Citigroup Inc. ushered in the era of U.S. bank conglomerates in the 1990s, has said ending Glass-Steagall’s prohibitions was a mistake.
“What we should probably do is go and split up investment banking from banking,” Weill said in July 25, 2012 CNBC interview. “Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.”
Overdue. Of course. But, then I opposed the end of Glass-Steagell in the first place. That was nothing more than an further act of capitulation to Republican conservatives by Democrats hoping to stay in power by passing laws against civil rights for the LGBT community, opening our borders to so-called Free Trade – generally aiding the flight of jobs and capital offshore. Some guy named Clinton did all that.